Warehouse Hiring Surges on Rising E-Commerce Demand

Date: Tuesday, May 7, 2019
Source: The Wall Street Journal

Logistics gains in April came as job growth for other transport operators lost steam

Warehouse operators stepped up hiring in April as e-commerce demand drove up employment in distribution centers even as job growth across the rest of the freight-transportation sector slowed.

Warehousing and storage companies added 5,400 jobs last month, according to preliminary figures the Labor Department reported Friday, the fourth straight month of growth in a sector that includes fulfillment centers that process and ship online orders. The sector added nearly 70,000 jobs over the past 12 months.

Courier and messenger companies that deliver packages to homes and businesses also expanded in April, adding 1,000 jobs.

Trucking company payrolls shrank by 500, the first decline in 11 months, a sign of caution as carriers that recruited aggressively during last year’s hot freight market adjust to softening conditions. The Labor Department revised its earlier numbers to show the sector added 300 positions in March after earlier reporting truckers cut 1,200 jobs that month.

The gains in warehousing and delivery come as rapid e-commerce growth pushes companies to open more fulfillment centers near major population centers to speed up delivery to customers. U.S. online sales jumped 14.2% in 2018, generating an estimated $513.6 billion, according to the U.S. Census Bureau.

Brian Devine, senior vice president of logistics-staffing firm ProLogistix, said he is seeing “huge growth” for logistics and e-commerce workers in key hubs like Southern California’s Inland Empire; areas of New Jersey near New York City; Atlanta; Indianapolis; and Memphis, Tenn.

“There are not enough workers in those markets,” Mr. Devine said. “The unemployment rate is so low that it’s difficult for us to fill those positions.” He said the average wage for ProLogistix workers jumped 6.8% in April from the same month a year ago, to $13.81 an hour.

Hiring in the warehousing and storage sector could get a boost in the second quarter, when internet giant Amazon.com Inc. plans to invest $800 million to make one-day free shipping the standard for its Prime members, instead of two days.

Amazon’s move to faster delivery should accelerate overall e-commerce growth, “and other retailers may need to reconfigure distribution networks in an effort to improve speed,” KeyBanc Capital Markets analysts said in an April 30 research note. It could also benefit companies that provide “last-mile” delivery, an area of increased focus for large carriers such as J.B. Hunt Transport Services Inc.

Overall, the U.S. economy added 263,000 jobs in April, exceeding economists’ expectations, while the unemployment rate fell to 3.6%, the lowest level in nearly 50 years, as labor-force participation declined. Transportation and warehousing companies overall added 11,100 jobs, including 5,100 positions in transit and ground passenger transport.

But the report was mixed for sectors that push freight through logistics networks, with most of the job gains coming in areas such as health care and administrative services that don’t produce much shipping volume. Manufacturers added just 4,000 jobs last month, when U.S. factory activity slowed as businesses grappled with uncertainty over trade tariffs amid a cooling global economy. Retailers cut 12,000 jobs.

Trucking companies appear to be retrenching after a long stretch of expansion last year. Truckers are “trying to make sure they don’t get too far out of sync with the freight market,” said Avery Vise, vice president of trucking at research firm FTR.

North American orders for heavy-duty trucks fell more than 50% in April from the same month a year ago, according to preliminary data from FTR and ACT Research. It was the lowest April order level since 2016, with orders for 16,400 units, FTR said, although fleets continue to hunt for open build slots amid a production backlog.

Schneider National Inc., one of the largest U.S. carriers, cut its 2019 earnings outlook this week after reporting weak first-quarter truckload results. Trucker ArcBest Corp. said its first-quarter profit fell by more than half on the moderating U.S. shipping market.

 

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